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Hello. I secured a loan from my fully paid educational plan wherein the terms of the loan payment was via installment for 36 months. The loan maturity date is late 2011, but I recently discovered that the person I tasked to pay for the loan failed to pay the installment dues since Jan. 2010.

Now the collection dept. of the bank which is working with the insurance company is asking me to get my refund of what is left of the cash surrender value of the insurance, because they say that they have a policy of terminating insurances when there is a default of loan payment after 60 days (I cannot recall reading this, and I do not see this in the promissory note in which I signed...). In my case, the loan maturity date has not been reached yet.

And of course I have the full intention that the loan will be fully paid including accrued interests on or before the loan matures....

My questions are:

1. Is it legal to cancel/terminate an insurance because the installment dues of a loan acquired from the said insurance has not been paid for 60-90 days? From what i understand, interests are just accrued and the payment will only be considered default after the loan maturity date , not after 60-90 days of unpaid loan installment dues?

2. I have not even received a letter of termination/cancellation of my insurance/benefits. All I got from them was a letter a few days ago that the installment dues are not being paid since Jan. 2010. And then they call me to suddenly get my refund. Is it legal that they terminated my insurance without prior notice?

3. Is it legal that such 60-90 day non-payment of loan installment dues policy, supersede the insurance code?

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